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week our new air time in washington is 7:30 a.m. i'm bill loveless. we'll see you next week. welcome to this week in defense news i am vago muradian. the air force celebrates the 61st birthday with a new chief of staff a top retired airman talks to us about the general's challenges and priorities and how sweden's top company plans to grow in the united states. britain's's pan european disclosed discussing a union to create a 93 billion dollar titan that would be the world's largest aerospace and defense company. deal if approved by global regulators would join europe's leading military and aerospace contractors into a new giant that builds commercial cargo fighter trainer aircraft helicopters and rockets and
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saturdayel lights missiles and radars and other sophisticated electronics communication systems and security products. the companys proprosed the -- proposed complex ownership ada holding 68% and bae40%. to alie security concerns executives have promised to operate bae's vast operation independently of the new parent. what does the deal mean globally what's next and what will government regulators be focusing on. join us is stev. grundman who analyzes and reviewed defense mergers and acquisition at the pentagon during the clinton administration and he advices defense and aerospace companies worldwide and has absolutely no stake in this particular transaction. >> no. right. that's right. >> thanks very much for joining us. so, this would be just an enormous company. boeing is at 68 billion and the number one slot. and the guys would displays them. what does this mean for the global aerospace and defense industry. >> i don't think the absolute scale of it or the rank of them
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has a big significance for customers or shareholders. it's a matter of prestige. i think it excel rates the attention -- excel rates the attention cooperate strategists and regulators planned to give to restructures. it gets a ball rolling i pected to take a few more years to get rolling. i think that's the first big significance. >> and what are some other sort of knock off effects we will see from this do you think? >> first,. >> where are they in the process because twoness it was disclosed and both companies contermed itthey stopped talking. -- confirmed it they stopped talking. what are the next phases whenwill they formally announce it. >> i will observe that the amount of detail that the companies were able to quickly reveal about the transaction and about the structure of it once the news of it had been leaked suggested they are
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probably eminent to announce a formal definitive agreement between the two of them. so i don't think there will be a long delay. they indicated within a week or two at most i expect we will get an announcement of a definitive agreement. and then, a probably lengthy period of time. i don't think it's within one quarter but two quarters at best of working their stake holders, customers, regulators, shareholders. >> you were one of the people who were in the pentagon looking at defense industrial deals during the consolidation we saw the last time. what are the kind of questions that you think the pentagon and other regulators whether they are at the department of justice or federal trade commission or european union what are the questions they will ask and what are the answers they will look for from the companies. >> sure. the first thing to observe is that all of the assets in question here which is to say especially ba system assets which is sensitive operations of that company relative to
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this industrial base. >> and you are talking about the operation in the united states. >> yes operation ba systems in the united states already are owned by a foreign parent. >> right. >> right? and so, a lot of the hoops if you will that have to be jumped through in order to create a security regime around those assets have been jumped. now, there is a significance to a change ownership or change of proportion ownership in those assets. and that will be the focus of review. that will be of interest to the committee on foreign investment. that will be of interest to probably more informally customers, but that's the fundamental thing that's changing. we need to remember the assets already are foreign owned and they are already is an elaborate security structure around them to insulate them from their foreign owners in britain. >> but, at the time ba was able to buy the properties in the united states, they took advantage of the special relationship with the united states in order to do that. united kingdom was in a special place whether and nuclear
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issues or others issues. now you are intrucing french and german ownership. does that constitute a change in the security structure that surround that do you think? >> it's hard to say. i mean, there's no question that great britain has a special or more special relationship with the united states than do any of the other nation that is are implicated in the deal. having said that, you know these are nato members. we have very close relationships with the countries over we have a decade of fighting in war with them, sharing intelligence and other things that may have changed the landscape from what it was a dozen years ago terms of the level of trust that the u.s. government reflects towards government other than the united kingdom. >> when you were at the pentagon there was drive to create the transatlantic defense partnerships and no deal happened. is this something that can serve as that transatlantic anchor bridge between the states and europe -- united states and europe.
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>> the big winner in the prospect of this deal is the transatlantic relationship. i don't mean to sound too high mind butic thatting the largest aerospace and key fence -- but taking the largest aerospace and defense and giving it a big stake is good for the political international relationship. you know, setting aside shareholders issues and customers issues it realizes to your point the sort of values that we were after in better ingrating the defense industrial of the two. >> it's powerhouse in terms of product spread but it will have a complex ownership structure. this company going to end up being if it eu nights, as successful -- unites as successful as it is on paper now. >> that's going to depend on how successfully it can be managed. it will require a necessity a complex capitallation. it will have dual listing. >> there's french and german
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government ownership. >> there will be at least golden shares. it's not clear by the way whether -- in fact they have indicated they are going try to convert the existing government share hold eggs into gold -- holdings in golden shares in france and germany but it's going to be a mplex strapping global strapping operation that i think will the success of which is going to rely a lot more on the accu men and of the management than any of the more abstract questions. >> thanks very much for joining us. i am sure there are aerospace companies that will voice opposition or their views on this deal to regulators. thanks for joining news you are welcome newspaper next retired general chuck walled on the challenges facing the new chief.
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general mark welsh became the 20th chief of staff on august 10 starting the tenure with major challenges. for starters, congress rejected 9 billion dollars in cuts mandated by the obama administration under the terms of the budget control act to protest the air force desense to cut guards and units and leadership and pen knell issues as well as risk of billions in automatic defense cuts that could hit the services key acquisition programs. here to talk to us about welsh's challenges and priorities is chuck wald retired four star general the director of the defense practice at the federal government services. welcome back i should say. >> thanks good to see you. >> what are the cheal exthe new chief face -- challenges the
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new chief faces. >> you mentioned a couple. it's budgetary issues and recap tallation of the fleet after many, many years of hard flying and combat situations. as a matter of fact not just the last ten years but the previous ten before that. so 20 years of pretty tough line. and then he has some internal issues that he is work from a i that i morale and leadership standpoint that he's the perfect person for that. so, if you add those altogether, it's probably about as challenging as anybody had and add the environment we live in from a security standpoint and then past times when we have had the reductions in spending, based on in this case, the end of the iraq war and potentially afghanistan, or previous the end of the cold war there's been a peace dividend taken. the difference this time is we are not in a peace situation. we are in persistent conflict. so, you add those up together and it's about as challenging as it gets for mark. >> what do you think is top
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priorities have to be out of the box. >> number one is just establish himself as a leader that's going to protect and defend the fact that air power is one of the major capabilities in the united states military and that this is not a either or situation number one and artech late to the unitestates air force what the value proposition is. i think he is the perfect person for that. and then you add that again right away to the uncertainty of budgetary issues and the fact that the major part of the fleet, the fighter flight in this case, is aging tremendously, and how do recap tallize that. those challenges in itself will take four years. >> what -- the service has blocked the air force's proposed budget cuts what's the way around that? >> i think it's a compromise and reality that the guard and reserve for example in this case are major force that we in the united states need and serve a great purpose that's
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not -- it shouldn't be a well to make up for budgetary limitations where you decrease the guard reserve at the expense of our overall capability to project force. so, i think there's some personality issues that will come through and i think obviously with congress you have work to do. and mark has that personality to do that. >> what are, you discussed the importance of recap tal lizing the fighter fleet -- recap talizing the fighter free the there's tanker modernization is another critical piece of this. as you stack them up what are the critical core programs that going into this fiscal austerity the air force has to be defend over the strategic long-term. >> it's the issue broadly in defense. when the air force specifically, you mentioned the tanker and the good news is we have a tanker program. now we have to make sure we execute it right. that's a priority and it's not as simple as it sounds but he has to keep that in the forefront if we don't have
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mobility it doesn't do much for the country. two, to recap the jsf, the fighter force. tough program. we are talking leading edge technology. very expensive, but understandably so. we are replacing 6 aircraft around in the different services, marines, navy and air force or at least their capacity. so those six aircraft will be replaced by one will be actually a savings money long run but it's articulation you have to go through right now. it's -- we are leading edge technology so he has to get that on board. then the real mission today or not real mission but a mission that's emerged as not just in the naval but mission of priority and that's intelligencesurveillance reconnaissance and make sure we are on the leading edge of that in the world. not just with uavs but other technologies. those three and then he has the force structure of the manpower itself to contend with. >> sir thanks very much for
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joining us. we appreciate it. coming up, sweden solves plans to grow in the united states.
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when most americans heart name saab they thick of swedish cars no longer produced but the company was born in 1937 as an aircraft maker and gaining a
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repetition as one of the most innovative small defense companies producing cutting edge products from command and control gear and munition and management systems w a tiny home market the 3.4 billion dollar swedish company depend on global sales for survival doing business in 100 countries with the centerpiece with the centerpiece of the port fortho the fighter updated. saab is operated in america for 4 decades and the antitank weapon is popular with troops it canly in afghanistan. but it was not until last year it launched a north american division to expand growth. we recently met with saab president and crest ohakan buskhe on the sidelines of theconversation in washington, d.c. and i asked him to explain the global growth strategy. >> we have done i would say domestic strategy where we are trying to find out in different parts of the world where we can contribute. and also where we should launch
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our products or go together with others. that means that basically we have now focus on 32 countries, mainly divided into 6 areas in the world. and as we can see, we are growing continuously our offer and potential volume, and the interest for our affordable good products are large. >> what is the specific markets and most specific products you think will have most attraction. >> i can see for example the last year, our backlog -- large et order backlog is in asia not sweden. and we can see tremendous growth there. we have also had good development here in the united states. >> let's talk about the united states where you have been doing business for 40 years. but you sort of stood it up as an entity last year. what are some of the most specific products and growth strategy for the united states and does that include mergers
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and acquisitions? >> yes. to talks of -- to answer the last question yes. u.s. is a priority country for us. we can see that we have good experience the last years doing joint ventures and corporations with the big american companies. we have joint to go together in different programs and look at halifax and we have also other activities. so, we will not stop competing in u.s. with things that are already here. we are trying to figure out what we can contribute to when it comes to partnership with different big industrial leaders. on the other hand we can see for example training and our signature management and other things as well. and that we try to go ourself. so, i think we have a better defined strategy.
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and a growth for us that maybe is for a big one. it's huge for us. >> everybody thinks of the griffin as the emotional part of the program what are the products you think will have the biggest traction worldwide. >> greatness around 25 to 35% depending hon you count of the income or turnover of course our radar portfolio is important for us. our new ary. >> airborne warning system. >> that's one portion. the old -- we also have a lot of good development on our command and control for the navy around the world. so,. >> the operation is part of that portfolio. >> yes. our different parts but i believe that could really compete being -- in that scale as griffin or you can can see our radar portfolio and also
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our command and control. i believe that these are areas that we really can make a difference. >> if i look at your portfolio, it's vast. it's spreads from fighters to tore peedos command and control ammunition until recently and that's a hard decision to get out of that business. what are some other businesses that you think you should be getting out of? do you need to streamline to a fewer number of products. >> we have done that the last two years. we have sold more than 22 products or units within the company. and basically, according to the strategy that we have, if those products is just for local market and doesn't have an impact on our system, portfolio and give the possibility to we try to sell it: on the other hand if we can find products that give us the capabilities, we will try to buy it. that's why we have around 5% -- 5 companies the last two years. and that's why we have grown
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being rather small area in traffic management to be a leading place in the world today. >> sweden built a reputation for invasion, high quality, but also affordability. what are the keys to that model that almost every other country that's in a financial tough situation can learn from? what are the keys to striking those kind of balances that develop a gray product at a affordable price. >> you need to understand inthat case inform you do this type of product there are other people in the world that can contribute, and if you try to do everything yourself, and do every piece of the aircraft for example or something else, yourself and don't partner up with really skilled partners around the world, it will cost you a fortune. and if you try to do everything
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from a white paper with 15 to your product from the beginning instead of seeing someone else, and done some thinking around it, this can be utilized and maybe we can enhance the parts that needs to be fited into the product and joined together with them. and that's how we see it. so if you see our products, and especially griffin and the others it's a huge international corporation that we do. and i think that's the key. and engineers i am an engineer myself, could be a little touchy if it's not here it's not good. i think that's mentality we don't afford that mentality in sweden to make good products. >> but it's also less bureaucrat being i think than. >> yeah. >> some other places. >> yeah. we are extremely organization and we have doing with competitors and so and we have a tremendous flat organization. think it could be flatter. and i think it could be much
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leaner and we welcome that each and every day. so performance for us is a key thing. each and every day. and also to be able to deliver according to time and cost to our customers. that's a key thing. if we lose that reputation, i think we are dead. we need to do it and we need to be able to stand the competition. >> coming k, and i was trapped.
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no way out. my usualt ransport was nowhere to be found. i knew, then and there, that i needed wheels asap. thats alpha, sierra, alpha...pickle. ahem! sis here's in the military, so i can join navy federal too. he's getting a great rate - so now he can drive himself to laser tag. it's a real sport.
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no, its not. 4 million members. 4 million stories. navy federal credit union. in a stunning anoinsment last week britain ba systems and pan european disclosed stalks to unite the two companies that pending regulatory approval would become the world's largest defense aerospace firm with sales of some 93 billion dollars. eads would control 60% and executive stress that bae's north american unit that performed sensitive u.s. government work with woo remain independent. the deal would fundamentally reshape the global defense industrial landscape as the new titan would have a vas vast array ray of products includinghem helicopters missiles and saturdayet lie and command and communication gear as well as security systems.
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more deals are likely to cascade in the wake of the announcement that will reshape defense and aerospace landscape as the wave following the end of the cold war. owes physician spend the past three years thinking through what they want their suppliers base to look like. they have made it clear there's room for consolidation but not at the upper tiers of the industry. the chal j now is to make sure the industry that emerges after this consolidation phase preserves enough competition drives industrial efficiency and cuts cost and preserves key domestic capabilities and benefiting from global enervation and markets. thanks for joining us for this week in defense news you can watch this program online a e- mail me at vago at news defense tv. com. i want to wish 65th birthday to the united states air force. i will be back next week with the same time until then, have great week.
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. crowd sourcing medical research. can social media and personal genetics be the search for cures? i'm steve usdin. welcome to "biocentury this week"." your trusted source for biotechnology information and analysis, "biocentury this week." genetics came first. transforming how we view life. then came social media which is transforming our social lives. now silicon valley is trying to combine them turning jennette igs and social media into a crowd sourcing engine to drill down into the roots of disease. the idea is to obtain genetic samples from large numbers of people, some with the disease and many who don't have it. then researchers can look for genetic factors that may be important in causing the disorder or that protect against it. to test the

This Week in Defense
CBS September 16, 2012 8:00am-8:30am EDT

News/Business. Guests from the Defense Department, Congress and the defense industry.

TOPIC FREQUENCY Us 12, United States 8, Navy 6, Sweden 5, U.s. 4, Pentagon 4, Griffin 3, Britain 3, Europe 3, Saab 2, Pickle 2, Asap 2, United Kingdom 2, Sierra 2, Alpha 2, Afghanistan 2, Washington 2, Boeing 1, Cheal Exthe 1, Clinton Administration 1
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